sebi:15010

SEBI · SEBI · 2002-11-29 · V. K. Chopra, Whole Time Member

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Facts / Headnote

Minor penalty imposed: suspension of certificate of registration for seven days, with effect on expiry of twenty-one days from date of order

Provisions invoked

• s. 19

Regulations

• Reg. 4
• Reg. 7
• Reg. 13(4)
• Reg. 4(a)
• Reg. 6
• Reg. 199
• Reg. 13(1)
• Reg. 4(2)

Parties

• M/s Prashant J Patel (Broker, Registration No. INB230649816)

Holding

The Board held that broker Prashant J Patel violated Regulation 4(a)-(d) of the PFUTP Regulations 1995, Regulation 7 read with Schedule II clauses A(3) and A(4) of the Stock Brokers Regulations 1992, and NSE Capital Market Regulation 4.6.2 by executing 54 synchronized trades in Ranbaxy Laboratories Ltd. shares creating artificial volumes and false market. A minor penalty of seven days' suspension of the broker's registration certificate was imposed.

Full text

FOR COMPANIES/ BROKERS: 1. Advocate Shri Vinay Chavan 2. Advocate Shri Aditya Bhansali 3. Advocate Ms Kirti Sansur 4. Shri Bharat Patel FOR SEBI 1. Mrs Barnali Mukherjee, DGM, SEBI

1.3 The Board, after considering the Investigation Report, appointed an Enquiry Officer vide Order dated November 29, 2002 to enquire into the violations allegedly committed by Prashant J. Patel under the provisions of Regulation 4(a), (b) (c) & (d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995, (hereinafter referred to in short as “PFUTP Regulations”), Regulation 7 read with schedule II, clause A(3) and (4) of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to in short as “Stock brokers Regulations”) and Rules, Regulations and Bye-laws of Stock Exchange. 1.4 The Enquiry Officer, after conducting an enquiry in accordance with the provisions of Regulation 6 of the Securities and Exchange Board of India (Procedure for holding Enquiry by Enquiry Officer and imposing penalty) Regulations, 2002 (hereinafter referred to as “the Enquiry Regulations”) submitted a report dated March 26, 2004 under Regulation 13(1) of the Enquiry Regulations. The Enquiry Officer in his report observed that the broker has executed synchronized trades on behalf of its clients and thus violated the provisions of 4 (a), (b),(c) & (d) of PFUTP Regulations 1995 read with Regulation 4(2) (a, b, e & g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, Regulation 7, read with schedule II, clause A(3) and (4) of Stock Brokers Regulations and Regulation 4.

3.1 The broker contented that the disputed transactions had been executed by them on behalf of their clients. He further stated that without establishing any charge against their clients, no charge against them can be sustained. They have executed trades under instructions of their clients and there is no relationship with the client other than broker client relationship. The said clients have entered transactions in normal course in several scrips at the relevant time. Further, there was neither any proprietary trading of the broker nor any of the promoters/ employees have traded in Ranbaxy with the clients. The broker claimed that they had always maintained high standard of integrity, promptitude and fairness in the conduct of all their business and they have impeccable track record. They have always met their financial obligations vis a vis the clients or stock exchange and no complaints of the clients are pending with them. The broker further stated that they had over 1800 clients who were trading in approximately 500 scrips. Hence it is not practically feasible to get into the details as to why a particular client was trading in particular scrip and with what intention. Also they had only a minuscule percent (0.18% to the total market volume) of the alleged synchronized volume in comparison to the huge market volume in the scrip of Ranbaxy. It was further stated that the trades were speculative in nature. 4.0 HEARING 4.1 The broker was accordingly advised to attend the p

Source: SecMarx — sebi:15010. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.